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Fitch downgrades MTVH over ‘worsening’ financial metrics
Metropolitan Thames Valley Housing (MTVH) has seen its credit rating downgraded as Fitch Ratings pointed to the London landlord’s “worsening financial leverage metrics”.
The 57,000-home association has had its long-term issuer default rating lowered from A to A- by Fitch.
Ian Johnson, chief financial officer at MTVH, said the downgrade was “disappointing”.
The new rating was published on Friday 27 September, which was before MTVH released its audited full-year figures on Monday 30 September confirming an £80m deficit in its last full year.
The deficit, which was due to fire safety provisions and write-downs on two decommissioned high-rise blocks, was first unveiled in May.
Fitch said it views MTVH’s performance as “adequate, but deteriorating due to challenges in recent years and those expected in the near term caused by external macroeconomic pressures”.
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However, the agency retained its stable outlook for the G15 landlord. Fitch pointed out that MTVH’s costs are “well-identified and show low volatility”.
The agency added: “MTVH also has high flexibility on its investment and maintenance programmes, if needed.”
Fitch also flagged that the landlord has new stock in comparison with others in the sector.
Around 70% of its homes are less than 40 years old, while nearly half are less than 20 years old.
“Newer stock limits the costs of maintenance required to meet its duty to provide quality housing for tenants,” Fitch said.
MTVH’s net debt is also expected to have peaked in its last financial year due to “non-recurring” fire and building safety costs, according to the agency.
Mr Johnson said: “We work to maintain the highest credit ratings possible as this has a bearing on the cost of borrowing, so to see a small downgrade is disappointing.”
He added: “Alongside the rest of the sector, we have faced a tougher macro-economic climate and escalating building safety costs over recent years. Our approach has been to stand by our residents where needed and to take early and full provision for building safety costs.”
MTVH has continued to build new homes despite the one-off costs, he said, which included 892 in its last full year. This was up from 657 the year before. The group is aiming to build 1,000 new homes a year over the next five years.
Mr Johnson added: “Our lenders and banks are supportive of our strategy and financial approach. Our gearing level of 37% is one of the lowest in the G15 group of London’s largest housing associations, and our cash generated from operations is strong at £268m in the year to March 2024.”
MTVH also has a A- rating with a stable outlook from S&P. It has a G1/V2 rating for governance and financial viability from the English regulator.
Last month, Mel Barrett, the former chief executive of financially troubled Nottingham City Council, took over as boss of MTVH as a replacement for the long-serving Geeta Nanda.
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